If a former employer lies about a former employee by saying, for instance, that a good employee performed badly or by saying a bad employee performed well, the former employee who was lied about could certainly sue the former employer in the first instance and the new employer could sue the former employer in the second instance.
Here’s another important issue for employers to also keep in mind when in the process of talking to candidates or references: There are several protected classes set out by various acts passed by Congress about which prospective employers should never ask. By definition, “In United States federal anti-discrimination law, a protected class is a characteristic of a person which cannot be targeted for discrimination.” The following characteristics are considered “Protected Classes” by federal law: race, color, religion, national origin, age, sex, pregnancy, citizenship, familial status, disability, veteran status, and genetic information. Should an employer decide not to hire a candidate because he or she falls within any of these categories, that employer could easily find himself the defendant in a federal discrimination lawsuit! For instance, if it’s a company policy not to hire, let’s say, Methodists, and someone asks a candidate what his religion is and is told by the candidate that he is a Methodist, and, as a result, the candidate isn’t hired for that reason, the employer could end up being the defendant in a federal discrimination lawsuit.
There are two important points in this blog: first, if you’re a former employer or a reference for a former employee—always tell the truth. Second, never ask and never base a hiring decision on any of the previously enumerated “protected categories.”